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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: Mephisto who wrote (1194)	1/25/2002 7:10:07 PM
From: Karen Lawrence	Read Replies (2) \| Respond to of 5185

More re: "soft dollars"; Democrats force House to vote on campaign funds Enron's actions help assure vote on halting "soft money' Marc Sandalow, Washington Bureau Chief Friday, January 25, 2002 Washington -- With the Enron scandal providing fresh momentum, House Democrats claimed enough signatures yesterday to force a vote on overhauling the nation's campaign finance laws by year's end. The long-stalled measure -- declared dead by opponents last summer -- was revived with the help of a rarely used parliamentary tactic, which now compels Republican leaders to schedule an election-year vote on a proposal to ban unregulated contributions known as "soft money." Fierce opposition, mostly from Republicans, has killed previous attempts to pass an overhaul. Now, with public outrage heightened by Enron's apparent attempts to purchase political influence -- and congressional elections approaching -- supporters confidently predicted enactment of the most sweeping changes in campaign laws since the Watergate era. "We're going to pass it," House Minority Leader Dick Gephardt, D-Mo., said of the campaign reforms. Enron, which filed for bankruptcy in December, contributed nearly $6 million to political campaigns over the past decade -- including more than $500,000 to President Bush and donations to nearly three-quarters of the U.S. Senate and half of the House. Backers of the move to toughen campaign finance laws say the attempts to buy access and influence are textbook examples of why Americans distrust politics and campaign rules must be fixed. 'A PRIME CASE' "If the world's biggest bankruptcy joined at the hip with the administration's biggest contributors isn't a prime case for campaign finance reform, I don't know what is," Gephardt said. Sponsors obtained the signatures of 218 House members -- including 20 Republicans -- to override the objections of House leaders who had refused to schedule a vote on legislation written by Reps. Christopher Shays, R-Conn, and Marty Meehan, D-Mass. The bill is nearly identical to the McCain-Feingold measure that passed the Senate by a 59-to-41 vote last year. "The collapse of Enron clearly raises the suspicions of the American people about the connection between political contributions and public policy," said Rep. Nancy Pelosi, D-San Francisco, who had pushed the measure at her first meeting yesterday morning as the party's newly installed whip. "It certainly has changed the climate here." No date has been set for a House vote, although several members predicted that it could take place in the next several weeks. LAW WOULD BAN 'SOFT' FUNDS The proposed law would prohibit national parties from raising "soft money" and restrict the way parties and candidates pay for television commercials. Unlike direct contributions to candidates -- which are limited under federal law -- soft money contributions to parties are unregulated and have become an increasingly popular way to skirt limits set during the early 1970s in the aftermath of Watergate. The two parties have raised more than $600 million in soft money over the past three years. Opponents argue that limits restrict freedom of speech and would inhibit healthy party activities like voter registration drives. House Republican leaders -- who oppose the legislation -- outmaneuvered reformers last summer in a series of votes, effectively tabling the measures indefinitely. Reformers immediately initiated what is known as a "discharge petition" to override the House leadership, a tactic which seldom succeeds because members of the majority party do not want to embarrass their leaders. REPUBLICANS CROSS OVER As the House opened for business yesterday morning, the petition contained 214 names -- four short of the 218 needed to reach a majority. Two Republicans, Reps. Tom Petri of Wisconsin and Charles Bass of New Hampshire, pushed the total to 216. Gephardt then escorted Democrats Corrine Brown of Florida and Richard Neal of Massachusetts into the House chamber to complete the petition. "God love you," said Gephardt, who has spent more than seven years pushing for such a measure. Supporters -- many of whom had just returned from the winter recess -- hastily scheduled news conferences to herald the turn of events. "Campaign finance reform will finally get a fair vote," said Shays, who has long defied his party's leaders on campaign finance reform. There is still room for GOP opponents to amend the measure before it goes to a final vote. But supporters said the success of the discharge petition, and the allegations of influence peddling surrounding the Enron scandal, would make the measure difficult to stop. Democratic Party Chairman Terry McAuliffe predicted that Bush, despite his previous opposition, would sign the legislation if it reaches his desk, or face severe political consequences. "After Enron, he better get on board with it," McAuliffe said. White House spokesman Ari Fleischer said Bush supports changes in campaign laws, although not necessarily the ones proposed by Democrats. "The president is committed to having campaign finance reform enacted into law," Fleischer said. "The president has made it clear that he can't be counted on to veto it." "This puts tremendous pressure on the White House," said Rep. Ellen Tauscher, D-Walnut Creek, who signed the petition -- along with every other member of the Bay Area delegation -- within days of when it was first circulated last summer. Republicans have offered an alternative that would limit the amount of soft money donations, but opponents say the GOP proposal would still allow donors to contribute nearly a million dollars during each election cycle, which hardly qualifies as reform. Republicans have also offered amendments to require unions to obtain permission from their members before making contributions to political campaigns, something that Democrats have vigorously opposed.

To: Mephisto who wrote (1194)	1/26/2002 4:12:41 PM
From: Mephisto	Read Replies (1) \| Respond to of 5185

How Enron Cooked Its Revenues By DAN ACKMAN W hen I heard that the University of Texas had a 300-pound freshman nose tackle, I asked the folks at Enron about him. They said no, the kid weighs 3,000 pounds. How is that possible, I asked, and they said it's because they weighed him on Neptune. This is the story with Enron. Everything it said was true, so long as you realize it kept its books and records on another planet. Most of the attention lavished on Enron's accounting has focused on its balance sheet and its offshore partnerships. But the locomotive that powered Enron's rising share price was a revenue picture that was out of this world. Revenues were reported using a technique that is, while possibly LEGAL, wildly misleading. Over the past five years, Enron reported an increase in revenues from $13.3 billion in 1996 to $100.8 billion in 2000. Had it not gone bankrupt, Enron was slated to double its revenues again. Already ranked the seventh largest company in the United States, Enron might have challenged Exxon Mobil for the top slot. Companies of this size simply do not grow that fast. Enron's reported rate of growth in annual sales over five years was 57%, while Cisco, one of the great growth stories of all time, reported a 41% rate. This apparent growth was possible only because Enron used totally different accounting rules than other companies. Enron had a natural gas pipeline, but more than 90% of its business was from what it called wholesale services and other people call trading. Enron booked trades at their gross value, not their net value, as is done with other securities trades. Enron would put a buyer together with a seller, take "delivery" of the contract for one fleeting moment and book the entire "sale" as revenue. To be fair, some of Enron's competitors, such as Dynergy, account for revenue the same way. The tactic may be legal, but few investors - and few Wall Street analysts - understood it. When Merrill Lynch sells on behalf of a customer 10,000 shares of Wal-Mart stock for, say, $500,000, Merrill would consider as revenue the commission on the sale or the spread between the bid price and the ask price - perhaps $500. But Enron doing the same deal - albeit with an energy futures contract - would say it had revenue of $500,000. Enron's reported sales figures appear even more incredible on a per-employee basis. In 2000, Enron had 19,000 workers. Thus, per employee, its revenues were $5.3 million - more than three times the rate of Goldman Sachs and more than eight times the rate of Microsoft. Citigroup's was $469,748 per employee, IBM's, $283,333 These numbers should have at least raised questions on Wall Street, but did not: Nearly every major analyst covering Enron recommended that clients buy the stock, even weeks before the collapse. In addition, Enron's financial reports were notorious for their inscrutability. You searched in vain for any clear explanation of the most basic aspect of its accounting. A dollar booked by Enron was simply not comparable to a dollar booked by other firms. This accounting was the most basic Enron deception. Its performance looked unbelievable, and it was. Ackman writes Top of the News for Forbes.com Original Publication Date: 1/25/02 nydailynews.com